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Floor & Decor Holdings, Inc. (FND)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a clean beat: net sales $1,179.5M (+5.5% y/y) and diluted EPS $0.53 (+10.4% y/y), both above S&P Global consensus; EPS exceeded by ~$0.08 and revenue by $4M, driven by disciplined expense control, product margin strength, and modest interest/tax favorability ($0.02 EPS) despite distribution center headwinds .
  • Comparable store sales declined 1.2% (transactions -3%, average ticket +1.8%); monthly cadence softened into September and Q4-to-date comps are -2%, with a tougher lap from 2024 hurricane impacts (~110 bps) .
  • FY25 guidance tightened/raised: EPS $1.87–$1.97 (up from $1.75–$2.00), net sales $4.66–$4.71B (narrowed), comps -2% to -1% (lowered from -2% to flat), Adj. EBITDA $530–$545M (raised) while reiterating 20 openings and $280–$300M capex; gross margin includes DC drag (~70 bps for FY, ~100 bps in Q4) .
  • Management announced CEO succession: President Brad Paulsen to become CEO at the start of FY26; Tom Taylor to become Executive Chair, emphasizing continuity, faster commercial expansion (Spartan/Regional Accounts), and adjacent category growth (cabinets, outdoor, slabs) as strategic catalysts .

What Went Well and What Went Wrong

What Went Well

  • EPS and revenue beat with improved product margins: “We are pleased to report diluted EPS of $0.53… exceeded the high end of our guidance” and product margins up ~80 bps y/y, offsetting DC costs .
  • Operational discipline amid soft demand: Operating margin expanded 20 bps y/y to 6.1%; G&A leveraged 40 bps; pre-opening down 32% y/y; adjusted EBITDA +4.4% to $138.8M .
  • Strategic progress and customer experience: Opened five stores and a new Seattle DC; reached highest-ever net promoter scores in September; West division outperformed; design services and connected customers grew (18.8% of sales, +2% y/y) .

What Went Wrong

  • Traffic softness and project size reduction: Comps -1.2% driven by transactions -3% and lower job sizes; laminate/vinyl mix headwind to ticket growth (+1.8% at the low end of guidance) .
  • Sequential gross margin pressure: GM fell from 43.9% in Q2 to 43.4% in Q3 due to DC cost ramp (~90 bps in Q3, rising to ~100 bps in Q4), despite favorable product margins .
  • Q4-to-date sales softness and tougher lap: QTD comps -2% with ~110 bps hurricane benefit in Q4 2024 creating a headwind; macro backdrop remains constrained (existing home sales ~4M units, elevated mortgage rates) .

Financial Results

Core P&L vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$1,117.9 $1,214.2 $1,179.5
Diluted EPS ($)$0.48 $0.58 $0.53
Gross Margin (%)43.5% 43.9% 43.4%
Operating Margin (%)5.9% 6.8% 6.1%
Net Income ($USD Millions)$51.7 $63.2 $57.3
Net Income Margin (%)4.6% 5.2% 4.9%

Comps trajectory

MetricQ1 2025Q2 2025Q3 2025
Comparable Store Sales (%)-1.8% +0.4% -1.2%

Q3 2025 Operating KPIs

KPIQ3 2025
Monthly CompsJul -0.6%; Aug -0.4%; Sep -2.2%
Transactions (% y/y)-3%
Average Ticket (% y/y)+1.8%
Connected Customer Sales Mix18.8% of total; +2% y/y
Pro Sales Mix and Trend~50% of sales; comps essentially flat
Spartan (Commercial) Sales Growth+13.3% y/y
Store Count262 warehouse stores, 5 design studios, 5 DCs at quarter-end

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025)Current Guidance (Q3 2025)Change
Net Sales ($B)FY 2025$4.66–$4.75 $4.66–$4.71 Narrowed (lower top end)
Comparable Store Sales (%)FY 2025-2.0% to flat -2.0% to -1.0% Lowered
Diluted EPS ($)FY 2025$1.75–$2.00 $1.87–$1.97 Raised midpoints
Adjusted EBITDA ($M)FY 2025$520–$550 $530–$545 Raised floor/narrowed
Gross Margin (%) and DC impactFY 2025Not specified~43.6–43.7; ~70 bps DC drag FY; Q4 ~100 bps New detail
D&A ($M)FY 2025~245 ~240 Lowered
Interest Expense ($M)FY 2025~5 ~4 Lowered
Tax Rate (%)FY 2025~21–22 ~21 Lowered
Diluted Shares (M)FY 2025~109 ~108.5 Lowered
New Stores (count)FY 202520 20 Maintained
Capex ($M)FY 2025$280–$320 $280–$300 Tightened lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Demand/Macro (existing home sales, rates)Q1: Reduced openings to 20 amid macro uncertainty; comps -1.8% . Q2: First positive comp since FY22 at +0.4% .Q3 comps -1.2%; Q4-to-date -2%; existing home sales ~4.06M with early signs of stabilization .Stabilizing but still soft
Pricing/Product MixQ1: Tariff mitigation focus . Q2: GM 43.9% .Ticket +1.8% at low end; slower laminate/vinyl; product margins +80 bps y/y .Mixed; better/best resilient
Gross Margin/Distribution CentersPrior DC plans referenced; GM 43.9% in Q2 .GM 43.4% with ~90 bps DC impact; FY DC drag ~70 bps, Q4 ~100 bps .Near-term pressure from DC ramp
Store Growth/Cost DisciplineQ1: openings cut to 20 . Q2: 257 stores .262 stores; new store initial investment ~$1.5M lower than FY23 class; shift to mid/top-tier markets in 2026 .Structural cost improvement
Commercial Expansion (Spartan/RAM/Pro Desk)Q2: Commercial presence noted .Spartan +13.3% y/y; build-and-buy approach; RAM team foundation; faster commercial push .Accelerating
Technology/ERPLimited prior detail.~$9M finance/merch ERP implementation in FY25 G&A .Investment phase
Regional TrendsQ2: Not detailed.West outperforming; Texas/Florida under pressure; hurricanes distorting compares .Mixed by region
Brand/Design ServicesQ2: Not highlighted.Highest NPS; free design services as moat; increased awareness/marketing planned .Strengthening service differentiation

Management Commentary

  • “We are pleased to report… EPS of $0.53… exceeded the high end of our guidance… second consecutive quarter of double-digit EPS growth” (Tom Taylor) .
  • “We opened five new stores… ended the period with 262 stores… on track to open 20 new stores in fiscal 2025” .
  • “Highest net promoter scores ever” achieved in September, underscoring customer experience .
  • “Initial investment for our fiscal 2025 class of new stores is estimated to be about $1.5 million lower than our fiscal 2023 class… more second-use sites in the pipeline” .
  • “Product margin was up 80 basis points year over year,” offsetting ~90 bps DC pressure in Q3 (CFO) .
  • CEO succession: “Brad… to succeed me as CEO… I will transition to Executive Chair” (Tom Taylor) .

Q&A Highlights

  • CEO transition and growth trajectory: Taylor emphasized partnership with Paulsen, confidence through trough-level performance, pivot to more mid/top-tier markets for 2026 openings .
  • Competitive/pricing dynamics: Big box competition rational; pricing spreads maintained; product margin expansion despite tariffs and tough environment .
  • Regional pressure concentration: Texas/Florida mature markets under most pressure; West strong; rate declines could help as existing home sales improve .
  • Commercial strategy: Spartan to grow via build-and-buy; RAM team rebuilding foundation; Pro desk maturity with expected share-of-wallet gains .
  • Average ticket drivers/guide: Ticket +1.8% from mix/job size; Q4 implied ticket ~flat, transactions down low-to-mid single digits .

Estimates Context

MetricConsensus (Q3 2025)*Actual (Q3 2025)
Revenue ($USD)$1,175,564,840*$1,179,527,000
Diluted EPS ($)$0.4541*$0.53
# of Estimates (Revenue)20*—
# of Estimates (EPS)23*—
Target Price Consensus Mean ($)78.27*78.27*

Values retrieved from S&P Global.*

Implications: Clear beat on EPS (~17% above consensus) and slight revenue beat, likely driven by lean cost structure, product margin resilience, and below-the-line favorability, supporting the FY25 EPS raise and narrow sales range .

Key Takeaways for Investors

  • Quality beat with prudent guidance raise: EPS and revenue exceeded consensus, and FY25 EPS/Adj. EBITDA ranges were raised/narrowed despite comps headwinds—supportive for estimate revisions and near-term sentiment .
  • Near-term margin headwinds are transitory: DC ramp costs (~70 bps FY; ~100 bps Q4) mask underlying product margin strength; look for margin normalization post-Baltimore DC full ramp .
  • Demand remains soft but stabilizing: Q4-to-date comps -2% with tougher lap; watch existing home sales trajectory and mortgage rates into 2026 for comp inflection potential .
  • Structural cost and growth optionality: New store build costs materially lower; fleet young (~50% <5 years) and categories (cabinets/outdoor/slabs) plus design services provide multi-year attach/mix tailwinds .
  • Commercial is a multi-pronged growth engine: Spartan accelerating (+13.3% y/y) with build-and-buy strategy; RAM team foundation resets; expect increased contribution as financing conditions ease .
  • Regional and mix dynamics matter: West strength vs Texas/Florida pressure; laminate/vinyl mix and smaller projects weigh on ticket—monitor mix shift and pricing spreads .
  • Succession as a catalyst, not a reset: CEO transition to Paulsen preserves continuity, sharpens commercial/adjacent category execution; Taylor focused on long-term growth (to 500 stores and beyond) .

Additional Notes and Q3 Press Releases

  • Lancaster, CA store grand opening and Pro-focused events expand presence and engagement in the Antelope Valley region .
  • Sixth annual Pro Appreciation Month featured training webinars and major giveaways, reinforcing loyalty and share with Pros .